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Best Investments in 2021 to Consider | Stock Market Alternatives - Investments with high returns

Find some of the top investing options for 2021 in this guide.

Lori Wade
Lori Wade

The pandemic has affected the lives of many. Even if you haven’t invested before COVID-19 and feel like you’re a bit late in the game, don't lose hope. You can start investing now if you still have work and are able to earn an income.

Investing your money is much better than having it sit in a non-interest-bearing checking account. The question is, where should you start investing? Keep in mind many businesses are still struggling because of the pandemic, so you must choose wisely where to put your money. We have listed below some of the best investments in 2021 that you should consider.

Mutual Funds

Investing in mutual funds is the best way to expand your portfolio regardless of the economic outlook. Search for funds that invest in services and products that are always in demand, like food and health care. Experts suggest that you invest in healthcare funds with a low expense ratio, with The Balance pointing out Vanguard Health Care Fund earning 9% returns for the past year and 14.2% for the past decade.

Diversified Stock Market Index Funds

According to a financial adviser, new investors should invest in a low-fee, diversified stock market index fund. Investing in the Vanguard Total Stock Market Index Fund ETF is one of many experts' top picks. The fund is designed to monitor the performance of the CRSP (The Center for Research in Security Prices) U.S. Total Market Index. It represents most of the USA's investable stock market and includes small, medium, large, and micro-cap stocks traded on the New York Stock Exchange.

Real Estate

Real estate prices have been steadily on the rise in recent months. This industry looks likely to be rather turbulent going into 2021. And because of this, you have to take a closer look at it this year.

According to FTSE Nareit U.S. Real Estate Index, the real estate investment trusts (REITs) perform poorly in 2020, with trusts gaining only 7.25%. While in 2019, they gained 28%.

The question is, will real estate perform well this year? No one knows for sure, but some experts are optimistic that it will go up this year with the economy recovering from last year's loss. The industry was surprised in the previous year, and no one saw coronavirus coming.

With the massive switch to remote work, commercial real estate has been severely affected. There is a sudden increase in the closure of office buildings and other commercial spaces. But, experts believe that this misfortune will create better investment opportunities in the coming years.

You should also invest in real estate because it will be a counter-play to the stock market. When the stock market declines, real estate usually performs strong. Right now, considering the COVID-19 situation, the real estate industry is facing challenges. However, the real estate returns have remained comparable to the stock market for the past years, which serves as an excellent alternative to stocks in the equity space.

Municipal Bond Funds

You can invest in munis or municipal bonds issued by local governments and the state. Most of the time, the earned interest is free of federal income taxes and exempted from local and state taxes, making them quite appealing in high-tax states.

You can use the exchange-traded fund or the mutual fund to buy the munis. If you are not sure what is the perfect investment type for you, it is best to consult a financial adviser. But you can decide on the locality for additional tax advantages.

If you are a new investor, it is a good idea to invest in the municipal bond fund as they offer diversified exposure without the need to analyze individual bonds. This is also recommended if you are looking for cash flow.

Short-Term Corporate Bond Funds

Some companies would issue bonds to investors to raise money and package them using bond funds. The average maturity of short-term bonds is around one to five years, making them less susceptible to interest rate fluctuations than long-term or intermediate bonds.

For investors looking for cash flow, like retirees or those who want to minimize their overall portfolio risk while maintaining some income, corporate bond funds are excellent options.

Online Businesses

Because of the pandemic, the online business industry has been growing rapidly, and investing here is a good idea. According to research, 30% of small businesses with a web presence and less than 20 workers can generate over 25% of their revenue online. Ensure the company can cope with the latest software and apps to grow more, like time tracking for consultants and others.

What to Consider on Where to Invest

You need to consider some factors when deciding where to invest, including risk tolerance, investing knowledge, time horizon, and how much money you can invest. If you want to grow your wealth, you can choose the option with low-risk investments that pay well, or you can consider the riskier alternative and aim for a better return.

Risk tolerance refers to how capable you are of handling fluctuations in the value of your investments. Assess your financial situation and check how much you are willing to take risks.

Time horizon means when you need the funds. Are you expecting to get the funds tomorrow or within 30 years? Do you need it for your house downpayment, or will you use it for your retirement? This factor will help determine which type of investment will suit your needs.

Your knowledge and understanding of investing plays a vital role in deciding where to invest. If you choose to invest in stocks and bonds, you need a better understanding of the matter, and the same goes if you intend to invest in assets.


The first quarter of 2021 shows businesses trying to stand up after their loss last year. Change is a part of life, and we have to accept it. Most of the time, it affects your financial well-being. And that includes your business, job, and investment portfolio. Be prepared. Invest in one of the best investments in 2021 to ensure your future. Put your money in the market that will increase your investment returns, minimize losses, and have better control over your cash flow.

Personal Finance